Real Estate Credit Investments Limited (LON:RECI) has hosted two short webinars. In the first, RECI’s Chairman and manager gave a presentation outlining the fund’s strategy and operational management to deliver superior returns. In the second, they answered investor questions, including why the fund secured overwhelming shareholder support in the continuation vote at the recent AGM. They discussed how structural shifts are shaping pricing dynamics and how risks are managed. The discussion also explored its competitive advantages in recoveries, the rationale behind selective share buybacks, and how RECI’s lending model meets current opportunities and risk.
- Presentation: RECI’s Chair and manager outlined how Real Estate Credit Investments delivers a 10%+ weighted average yield by focusing on senior-secured loans, backed by UK and European property. RECI is actively redeploying repayments into a healthy pipeline of opportunities across a range of sectors supported by prudent LTVs.
- Q&A: For us, the most interesting part of the Q&A session was the review of the risks and opportunities from the structural shifts facing RECI as long-term interest rates normalise at higher levels. RECI finances “productive”, growing real estate sectors that earn sustainable income to support higher valuations.
- Valuation: RECI traded at premiums to NAV in the five-year, pre-pandemic era. The current discount to NAV is 9.6%. The dividend has been a consistent 3p per quarter for many years and generates a 9.6% yield. RECI is moving to lower-risk but higher-margin exposures, which should improve dividend cover.
- Risks: Any lender is exposed to credit risks. We believe RECI has appropriate policies to reduce default probability and loss in the event of default. Positions are illiquid. Its average total commitment to expected value LTV is 69.7%, and most loans (all of the top 10) are senior-secured, providing a downside cushion.
- Investment summary: Real Estate Credit Investments generates an above-average dividend yield from well-managed credit assets; directors and management have demonstrated their confidence in its sustainability through share purchases. Market wide, credit risk is currently above average, but RECI’s strong liquidity and debt restructuring expertise should allow it time to manage problem accounts. An extended £10m buyback programme was announced on 30 September 2025.
